Soochow Securities released a research report stating that calculated daily waste generation in the ASEAN-10 and Indian markets reaches 1.46 million tons/day, indicating vast overseas market potential, with an estimated investment space of approximately 250 billion yuan for waste-to-energy in these regions. The logic of improving Return on Equity (ROE) for the waste-to-energy sector continues to materialize, and new growth from overseas expansion is promising. 1) New Growth from Overseas Expansion: The overseas market for waste-to-energy offers broad potential, with overseas projects significantly benefiting from higher electricity prices and higher waste treatment fees, leading to increased revenue. Indonesian policy shifts are driving a business model change to a single electricity fee revenue stream; with effective cost control, profit per ton can be significantly enhanced. 2) Dividend Increases + ROE Improvement Materializing. The main views of Soochow Securities are as follows:

The overseas market space is vast, with an estimated investment potential of about 250 billion yuan for waste-to-energy in the ASEAN-10 and Indian markets. Based on 2024 population estimates, daily waste generation in the ASEAN-10 and Indian markets reaches 1.46 million tons/day. Assuming a waste-to-energy penetration rate of 50% for each country (Singapore, with its comprehensive recycling system, is assumed to have a 40% incineration rate), the potential daily waste incineration volume for the ASEAN-10 and Indian markets is still 496,900 tons. Using a cautious estimate of 500,000 yuan investment per ton, the investment potential reaches 248.5 billion yuan. Domestic waste-to-energy companies have overseas projects spread across Southeast Asia and Central Asia, etc. Companies like Everbright Environment, China Tianying, Junxin Shares, and others are leading in operational expansion abroad, while Sanfeng Environment has rich experience in equipment and EPC exports.

Revenue comparison of overseas vs. domestic project cases shows that high treatment fees/high electricity prices drive a significant increase in revenue per ton for overseas projects. Assuming projects operate 330 days per year, with electricity generation per ton of waste being 320 kWh/ton domestically, 410 kWh/ton in Kyrgyzstan, 370 kWh/ton in Vietnam, and 410 kWh/ton in Indonesia, the analysis calculates revenue per ton for a domestic project with 1,000 tons/day capacity at 268 yuan. In contrast, revenue per ton for projects in Kyrgyzstan/Vietnam/Indonesia are 324 yuan/413 yuan/582 yuan respectively, representing increases of 21%/54%/117%, primarily driven by the combination of higher treatment fees and higher electricity prices in overseas projects.

Indonesia is optimizing its business model by unifying revenue sources and enhancing the credit rating of the paying entity. ① Policy Upgrade: Transitioning from local government leadership to national leadership, with funding sources shifting from local budgets to the national budget. ② Business Model Change: Eliminating waste treatment fee subsidies led by local governments and signing direct 30-year fixed electricity price agreements with the national utility at $0.20 per kWh. ③ Scope Expansion: Planning to build 33 waste-to-energy power plants nationwide, with a total investment of approximately $5.6 billion, each with a processing capacity of about 1,000 tons/day. ④ Rapid Progress: Indonesia's sovereign wealth fund initiated the tender for the first batch of waste-to-power projects in November 2025, covering 7 regions, with all approval processes using a "green channel."

Profit per ton for Indonesian projects surges significantly, realizing the logic of high electricity price premiums. Economic calculations comparing Domestic vs. Old Indonesian Project vs. New Indonesian Project. Assumptions: ① Basic Assumptions: 1,000 tons/day single project, 330 operating days/year, equity ratio 30%, loan ratio 70%, depreciation/amortization period 28 years, electricity generated per ton achieved at 320 kWh/ton domestically and 410 kWh/ton in Indonesia. ② Investment Cost Assumption: Domestic project investment 500,000 yuan/ton, Indonesian project investment 1,000,000 yuan/ton. ③ Financing Cost Assumption: Domestic project loan interest rate 3%, Indonesian project loan interest rate 4%. ④ Operating Cost Assumption: Domestic project operating cost 43 million yuan, management and other expense ratio 7%; Indonesian project operating costs approximately 30% higher than domestic (excluding depreciation/amortization), management and other expenses approximately 30% higher than domestic. 1) Domestic Benchmark Model Calculation: ① Waste treatment fee 70 yuan/ton; ② Feed-in tariff 0.65 yuan/kWh (portion exceeding 280 kWh/ton priced at 0.4 yuan/kWh). Calculation yields revenue per ton of 238 yuan/ton, gross profit per ton of 108 yuan/ton, net profit per ton of 66 yuan/ton, net profit margin of 27.71%, ROE of 14.51%. 2) Old Indonesian Project Calculation: ① Waste treatment fee 180 yuan/ton; ② Feed-in tariff approx. 0.91 yuan/kWh. Calculation yields revenue per ton of 487 yuan/ton (+104% vs. domestic benchmark), gross profit per ton of 279 yuan/ton (+159%), net profit per ton of 135 yuan/ton (+104%), net profit margin of 27.71% (+0.01 pct), ROE of 14.84% (+0.33 pct). 3) New Indonesian Project Calculation: ① No waste treatment fee; ② Feed-in tariff approx. 1.42 yuan/kWh. Calculation yields revenue per ton of 512 yuan/ton (+115%), gross profit per ton of 305 yuan/ton (+183%), net profit per ton of 155 yuan/ton (+135%), net profit margin of 30.23% (+2.52 pct), ROE of 17.04% (+2.52 pct).

The profitability of Indonesian projects is significantly influenced by cost control. 1) Investment Cost: If investment per ton decreases from 1 million yuan to 700,000 yuan, ROE would significantly increase from 17.04% to 31.44%. Assuming investment per ton of 700k/800k/900k/1M yuan, corresponding net profit per ton would be 200/185/170/155 yuan/ton, and project ROE would be 31.44%/25.44%/20.77%/17.04% respectively. 2) Financing Cost: For every 1 percentage point decrease in loan interest rate, ROE increases by 1.82 pct. Assuming loan interest rates of 7%/6%/5%/4%, corresponding net profit per ton would be 105/122/138/155 yuan/ton, and project ROE would be 11.58%/13.40%/15.22%/17.04% respectively. 3) Operating Cost: If the operating costs and management/other expenses for Indonesian projects are reduced from being 30% higher than domestic levels to being equal to domestic levels, ROE would increase by 2.39 pct to 19.43%. Assuming Indonesian project operating costs and management/other expenses are 0%/30%/50% higher than domestic levels, corresponding net profit per ton would be 177/155/140 yuan/ton, and project ROE would be 19.43%/17.04%/15.44%.

Risk warnings: Risks associated with changes in overseas policies, intensifying competition in overseas expansion, and changes in tax policies.